<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED MARCH 27, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from____________ to_____________

                         Commission file number 0-19649

                       CHECKERS DRIVE-IN RESTAURANTS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


   DELAWARE                                                       58-1654960
  (State or other jurisdiction of                           (I.R.S. employer
   incorporation or organization)                           identification no.)

   14255 49th Street North, Building 1
   Suite 101
   Clearwater, FL                                                  33762
   (Address of principal executive offices)                      (Zip code)

       Registrant's telephone number, including area code: (727) 519-2000

              Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [ ]

              The Registrant had 9,436,094 shares of Common Stock, par value
$.001 per share, outstanding as of March 27, 2000.

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
                                                                                                       PAGE
<S>                                                                                                    <C>
PART I   FINANCIAL INFORMATION

Item 1   Financial Statements

          Condensed Consolidated Balance Sheets
           March 27, 2000 and January 3, 2000...........................................................3

          Condensed Consolidated Statements of Operations and Comprehensive Income
           Quarters ended March 27, 2000 and March 22, 1999 ............................................4

          Condensed Consolidated Statements of Cash Flows
           Quarters ended March 27, 2000 and March 22, 1999 ............................................5

          Notes to Condensed Consolidated Financial Statements..........................................6

Item 2   Management's Discussion and Analysis of Financial Condition
         and Results of Operations......................................................................9

Item 3   Quantitative and Qualitative Disclosures About Market Risk....................................12


PART II  OTHER INFORMATION

Item 1   Legal proceedings.............................................................................13

Item 2   Changes in Securities.........................................................................15

Item 3   Defaults Upon Senior Securities...............................................................15

Item 4   Submission of Matters to a Vote of Security Holders ..........................................15

Item 5   Other Information.............................................................................15

Item 6   Exhibits and Reports on Form 8-K..............................................................16

</TABLE>

                                       2
<PAGE>

PART I.    FINANCIAL INFORMATION

ITEM 1        FINANCIAL STATEMENTS

                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                    (Unaudited)
                                                                                     March 27,           January 3,
                                                                                        2000                2000
                                                                                 ------------------- --------------------
CURRENT ASSETS:
<S>                                                                                 <C>                   <C>
Cash and cash equivalents                                                                   $ 1,371              $ 4,371
Restricted cash                                                                               4,624                5,358
Investments                                                                                   1,725                2,193
Accounts and notes receivable, net                                                            2,557                2,784
Inventory                                                                                     1,660                1,736
Prepaid expenses and other current assets                                                       754                2,606
Property and equipment held for sale                                                         36,609               37,150
                                                                                 ------------------- --------------------
    Total current assets                                                                     49,300               56,198
Property and equipment, net                                                                  48,317               49,432
Notes receivable, net-less current portion                                                    1,163                1,210
Lease receivable, net-less current portion                                                    1,769                1,378
Intangibles assets, net                                                                      55,494               56,188
Other assets, net                                                                             1,135                1,247
                                                                                 ------------------- --------------------
                                                                                          $ 157,178            $ 165,653
                                                                                 =================== ====================
CURRENT LIABILITIES:
Senior notes, net of discount                                                              $ 41,793            $  45,848
Current maturities of long-term debt                                                          9,909                7,958
Obligations under capital leases                                                              1,558                1,523
Accounts payable                                                                              8,995                9,070
Reserves for restaurant relocations and abandoned sites                                       2,598                4,769
Accrued wages                                                                                 2,255                3,334
Accrued liabilities                                                                          12,491               13,508
                                                                                 ------------------- --------------------
    Total current liabilities                                                                79,599               86,010
Long-term debt, less current maturities                                                      14,922               17,761
Obligations under capital leases, less current maturities                                     7,299                7,677
Long-term reserves for restaurant relocations and abandoned sites                             3,841                2,324
Minority interests in joint ventures                                                            510                  535
Other long-term liabilities                                                                   4,769                4,683
                                                                                 ------------------- --------------------
    Total liabilities                                                                     $ 110,940            $ 118,990
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, authorized 2,000,000 shares, none issued
     at March 27, 2000 and January 3, 2000                                                        -                    -
Common stock, $.001 par value, authorized 175,000,000 shares, issued
      9,436,094 at March 27, 2000 and at January 3, 2000                                          9                    9
Additional paid-in capital                                                                  136,622              136,622
Accumulated deficit                                                                         (89,993)             (89,568)
                                                                                 ------------------- --------------------
                                                                                             46,638               47,063
Less treasury stock, 48,242 shares at March 27, 2000 and January 3, 2000,
      at cost                                                                                  (400)                (400)
                                                                                 ------------------- --------------------
    Net stockholders' equity                                                                 46,238               46,663
                                                                                 ------------------- --------------------
                                                                                          $ 157,178            $ 165,653
                                                                                 =================== ====================
</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                       3

<PAGE>


                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                    (In thousands except per share amounts)
                                   (UNAUDITED)
<TABLE>
<CAPTION>



                                                                                     Quarter Ended           Quarter Ended
                                                                                     March 27, 2000          March 22, 1999
REVENUES:                                                                           ------------------      -------------------
<S>                                                                                  <C>                     <C>
Restaurant sales                                                                               $ 49,511                $ 29,040
Franchise revenues and fees                                                                       2,500                     916
Owner fee & other income                                                                            176                     163
                                                                                    -------------------     -------------------
   Total Revenues                                                                              $ 52,187                $ 30,119
                                                                                    -------------------     -------------------

COSTS AND EXPENSES:
Restaurant food and paper costs                                                                  15,504                   8,568
Restaurant labor costs                                                                           16,411                   9,420
Restaurant occupancy expenses                                                                     3,837                   1,770
Restaurant depreciation and amortization                                                            958                   1,624
Other restaurant operating expenses                                                               4,845                   2,824
General and administrative expenses                                                               4,353                   2,916
Advertising                                                                                       3,737                   1,801
Bad debt expense                                                                                    180                     165
Owner depreciation                                                                                  247                     352
Other depreciation and amortization                                                                 962                     570
                                                                                    -------------------     -------------------
  Total costs & expenses                                                                         51,034                  30,010
                                                                                    -------------------     -------------------

  Operating income                                                                                1,153                     109

OTHER INCOME (EXPENSE):
Interest Income                                                                                     254                     188
Loss on investment in affiliate                                                                       -                    (434)
Interest expense (including loan cost and
     bond discount amortization)                                                                 (1,906)                 (1,685)
                                                                                    -------------------     -------------------
Loss before minority interests, income tax expense and extraordinary item                          (499)                 (1,822)
Minority interests in operations of joint ventures                                                    2                       -
                                                                                    -------------------     -------------------
Loss before income tax expense and extraordinary item                                              (497)                 (1,822)
Income tax expense                                                                                   37                      37
                                                                                    -------------------     -------------------
Net loss from continuing operations before extraordinary item                                      (534)                 (1,859)
Gain on early extinguishment of debt, net of income taxes                                           109                     256
                                                                                    -------------------     -------------------
Net loss                                                                                         $ (425)               $ (1,603)
                                                                                    ===================     ===================

Comprehensive loss                                                                               $ (425)               $ (1,603)
                                                                                    ===================     ===================

Net loss per share (basic and diluted):
    Net loss before extraordinary item                                                            (0.06)                  (0.38)
    Extraordinary item                                                                             0.01                    0.05
                                                                                    -------------------     -------------------
    Net loss                                                                                      (0.05)                  (0.33)
                                                                                    ===================     ===================
Weighted average number of common shares outstanding
  (basic and diluted)                                                                             9,388                   4,864
                                                                                    ===================     ===================

</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       4

<PAGE>


                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                                               Quarter Ended
                                                                                         -------------------------
                                                                                          March 27,      March 22,
                                                                                             2000          1999
                                                                                         -----------    ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                       <C>            <C>
  Net loss                                                                                     $ (425)      $ (1,603)
  Adjustments to reconcile net earnings to net cash
    provided by operating activies:
      Depreciation and amortization                                                             2,167          2,547
      Gain on bond repurchases                                                                   (109)          (256)
      Amortization of bond costs and discounts                                                     81             99
      Provisions for bad debt                                                                     180            165
      Loss, net of amortization on investment in affiliates                                         -            434
     Minority interest in operations of joint ventures                                             (2)             -
  Change in assets and liabilities:
    Decrease (increase) in receivables                                                           (297)          (100)
    Decrease in inventory                                                                          76            145
    Decrease (increase) in prepaid expenses and other current assets                            1,852           (234)
    Decrease in deposits and other assets                                                          38             34
    Increase (decrease) in accounts payable                                                       (75)         1,909
    Increase (decrease) in accrued liabilities                                                 (2,561)         1,223
                                                                                           -----------    ----------
        Net cash provided by operating activities                                                 925          4,363
                                                                                           -----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                                           (391)          (408)
  (Increase) decrease in investments                                                              468            (48)
   Proceeds from sale of property & equipment held for sale                                       471              -
                                                                                           -----------    ----------
        Net cash provided by (used in) investing activities                                       548           (456)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt and capital lease obligations                           (1,231)          (432)
  Decrease in restricted cash                                                                     734            638
  Repayments of senior notes                                                                   (3,953)        (1,985)
  Distributions to minority interests                                                             (23)             -
                                                                                           -----------    ----------
         Net cash used in financing activities                                                 (4,473)        (1,779)
                                                                                           -----------    ----------
         Net increase (decrease) in cash                                                       (3,000)         2,128
CASH AT BEGINNING OF PERIOD                                                                     4,371          4,601
                                                                                           -----------    ----------
CASH AT END OF PERIOD                                                                         $ 1,371        $ 6,729
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION---                                       ===========    ==========
    Interest paid                                                                               1,180            390
                                                                                           ===========    ==========

</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       5

<PAGE>

                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                AND SUBSIDIARIES
                         NOTES TO CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)       BASIS OF PRESENTATION - The accompanying unaudited financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments necessary to present fairly the information set
forth therein have been included. On August 9, 1999, Checkers Drive-In
Restaurants, Inc. ("Checkers" or the "Company") merged with Rally's
Hamburgers, Inc. ("Rally's") (see Note 3: Merger). The 1999 financial
information presented in the Condensed Consolidated Statements of Operations
and Comprehensive Income and the Condensed Consolidated Statements of Cash
Flows herein represents the financial results of Rally's only. The Condensed
Consolidated Balance Sheets represents the combined results of the merged
entity. The operating results for the quarter ended March 27, 2000, are not
necessarily an indication of the results that may be expected for the fiscal
year ending January 1, 2001. Except as disclosed herein, there has been no
material change in the information disclosed in the notes to the consolidated
financial statements included in the Company's Annual Report on Form 10-K/A
for the year ended January 3, 2000. Therefore, it is suggested that the
accompanying financial statements be read in conjunction with the Company's
January 3, 2000 consolidated financial statements.

(b)       PURPOSE AND ORGANIZATION - The principal business of Checkers is the
operation and franchising of Checkers and Rally's restaurants. At March 27,
2000, there were 463 Rally's restaurants operating in 18 different states and
there were 441 Checkers restaurants operating in 22 different states, the
District of Columbia, Puerto Rico and the West Bank in the Middle East. Of those
restaurants, 367 were Company operated (including 3 joint venture restaurants)
and 537 were operated by franchisees, including 22 Company-owned restaurants in
Western markets which are operated as Rally's restaurants by CKE Restaurants,
Inc. ("CKE"), a significant shareholder of the Company, under an operating
agreement which began in July, 1996. On March 30, 2000, the Company sold 62
restaurants to a franchisee (see Note 7: Subsequent Events), and as of that
date, the Company had 305 company-operated restaurants and 599 franchised
restaurants. The accounts of the joint ventures have been included with those of
the Company in these condensed consolidated financial statements. Intercompany
balances and transactions have been eliminated in consolidation and minority
interests have been established for the outside partners' interests. The Company
reports on a fiscal year which will end on the Monday closest to December 31st.
Each quarter consists of three 4-week periods, with the exception of the fourth
quarter which consists of four 4-week periods. The Company's 1999 fiscal year
included a 53rd week, thereby increasing the fourth quarter to seventeen weeks.

(c)       INVENTORY - Inventory which consists principally of food and supplies
are stated at the lower of cost (first-in, first-out (FIFO) method) or market.

(d)       USE OF ESTIMATES - The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.

(e)       RECLASSIFICATIONS - Certain amounts in the 1999 financial statements
have been reclassified to conform to the 2000 presentation.

NOTE 2:    GOING CONCERN AND LIQUIDITY

           The consolidated financial statements for the fiscal year ending
January 3, 2000, were prepared on a going concern basis of accounting and do
not reflect any adjustments that might result if the Company is unable to
continue as a going concern. At January 3, 2000, the Company had $6.2 million
outstanding under its Restated Credit Agreement maturing on April 30, 2000,
$45.8 million of its 9 7/8% Senior Notes maturing June 15, 2000, and had a
working capital deficit of $29.8 million. As of May 11, 2000, the Company has
repaid the balance owed under its Restated Credit Agreement and has reduced
its Senior Notes, bringing the outstanding balance to $40.0 million.

           The Company is aggressively pursuing a debt reduction strategy and
believes the majority of the debt reduction can be accomplished by the sale of
Company owned restaurants to new or existing franchisees in transactions that
provide immediate funds to reduce debt and also provide a continued source of
income through future royalties. As of May 11, 2000, the Company has completed
four separate transactions involving the sale of 135 restaurants to new and
existing

                                       6
<PAGE>

franchisees and a sale leaseback transaction which have generated cash
proceeds to the Company of approximately $34.2 million less selling costs and
other expenses. The most recent of these transactions, the sale of 62
Checkers restaurants, was completed on March 30, 2000. In addition, the
Company is continuing to pursue the sale of Company operated restaurants and
currently has entered into either contracts or non-binding letters of intent
to sell 142 additional restaurants in five separate transactions. The Company
has also entered into a contract to sell its modular building manufacturing
facility. Together, these remaining transactions are expected to generate net
proceeds to the Company of approximately $33.5 million. The Company expects
to close many, but possibly not all of these transactions prior to the June
15, 2000 maturity date of the 9 7/8% Senior Notes. The Company is currently
working with financial institutions to secure bridge financing or other types
of financing that would enable it to meet its upcoming debt obligations.
Although the Company believes that its debt reduction and refinancing
strategy will be successful, there can be no assurance that the Company will
be able to satisfy the entire principal balance of the Senior Notes due June
15, 2000.

NOTE 3:    MERGER

           On August 9, 1999, Checkers completed its acquisition of Rally's
(the " Merger"). The Merger transaction was accounted for under the purchase
method of accounting and was treated as a reverse step acquisition as the
stockholders of Rally's received the larger portion (51.8%) of the voting
interests in the combined Company and Rally's previously owned 26.06% of
Checkers. Accordingly, Rally's was considered the acquirer for accounting
purposes and recorded Checkers' assets and liabilities based upon their fair
market values. The operating results of Checkers' have been included in the
accompanying consolidated financial statements from the date of acquisition. The
excess of the purchase price over the estimated fair value of net assets
acquired was approximately $27 million, including $11.5 million relating to
Rally's original investment in Checkers, and is being amortized over 20 years
using the straight-line method. During the first quarter of fiscal 2000, there
was not a material change to the estimated fair value of assets acquired,
liabilities assumed and resulting goodwill relating to the Merger, reported in
the Company's annual report on form 10K/A for the fiscal year ended January 3,
2000. However, the estimated fair value of assets may be subject to further
refinement.

                                       7

<PAGE>

NOTE 4:    LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES

Long-term debt and obligations under Capital Leases consists of the following:
<TABLE>
<CAPTION>
                                                                                                         ($ 000)
                                                                                                 MARCH 27,      JANUARY 3,
                                                                                                   2000           2000
                                                                                                 ----------    ------------
<S>                                                                                              <C>            <C>
Note payable under Restated Credit Agreement, interest at 13% due each
   twenty-eight day period, originally maturing July 31, 1999, subsequently
   extended to April 30, 2000. Secured by substantially all Checkers assets.
   ( As of May 3, 2000, this has been repaid).                                                      $ 6,047         $ 6,202

Mortgages payable to FFCA Acquisition Corporation, secured by twenty-four
   Company-owned Checkers restaurants, payable in 240 aggregate monthly
   installments of $93 including interest at 9.5%.                                                    9,793           9,824

Mortgages payable to FFCA Acquisition Corporation secured by eight
   Company-owned Rally's restaurants, payable in 240 monthly
   installments of $40, including interest at 9.5%.  The Company utilized
   the net proceeds of the loan to retire a portion of its Senior Notes.                              4,211           4,224

Obligations under capital leases, maturing at various dates through January 1,
   2018, secured by property and equipment, bearing interest ranging from 10% to
   17%, payable in monthly principal and interest installments averaging $197.                        8,856           9,193

Notes payable to former Rally's franchise owners for acquisition of markets,
   secured by the related acquired assets, with maturities through May 1, 2004,
   bearing interest at rates ranging from 7.5% to 9%, payable in monthly
    principal and interest installments ranging from $5 to $50.                                       4,044           4,247

Various other notes payable to banks, maturing at various dates through November
   10, 2001, secured by property and equipment, bearing interest ranging from
   1/2% above prime to 15.8%, payable in monthly principal and interest
   installments ranging from $2 to $13.                                                                 737           1,229
                                                                                                -----------     ------------

Total long-term debt and obligations under capital leases                                          $ 33,688        $ 34,919

Less current installments                                                                           (11,467)         (9,481)
                                                                                                -----------     ------------
Long-term debt, less current maturities                                                            $ 22,221        $ 25,438
                                                                                                ===========     ============
</TABLE>

NOTE 5:    SENIOR NOTES

           On March 9, 1993, the Company sold approximately $85 million of 9
7/8% Senior Notes due June 2000 (the "Senior Notes"). The Senior Notes are
carried net of the related discount, which is being amortized over the life
of the Senior Notes. Interest is payable June 15 and December 15 of each year
until maturity. The Senior Notes include certain restrictive covenants,
which, among other restrictions, limit the Company's ability to obtain
additional borrowings and to pay dividends as well as impose certain change
of control provisions, as defined. As of March 27, 2000 and January 3, 2000
the amounts outstanding net of discounts were $41.8 million and $45.8
million, respectively.

           As discussed in Note 2, the Company is evaluating various
alternatives for the repayment and refinancing of the Senior Notes prior to
their maturity in June 2000. There can be no assurance that the Company will
be able to satisfy the entire principal balance of the Senior Notes on the
maturity date of June 15, 2000.

NOTE 6:    ACCOUNTING CHARGES AND LOSS PROVISIONS

           At the end of fiscal 1999, the Company had a reserve of $7.1
million relating to restaurant relocations and abandoned sites. This reserve
represents management's estimate of future lease obligations and is reviewed
and adjusted periodically as more information becomes available regarding the
ability to sublease or assign the lease and other negotiations with the
landlord. During the first quarter of 2000, the Company made lease and other
payments of $518,000.

                                       8
<PAGE>


           During the last quarter of 1999, the Company placed certain
markets for sale in accordance with its plan to meet its short-term debt
requirements. At the end of 1999, 5 major Rally's markets were written down
to their estimated fair market values, based on purchase prices expected to
be received during the first half of fiscal year 2000. The Company recorded a
valuation allowance of $13 million relating to property and equipment and
intangibles assets associated with these market sales. In addition, in
connection with the Merger with Checkers, the Company sold 3 existing
Checkers' markets (See Note 7: Subsequent Events). Since these market sales
did not occur during this quarter, no adjustment has been recorded.
Additionally, it is not expected that the upcoming sales will materially
change this estimate.

NOTE 7:    SUBSEQUENT EVENT

           On March 30, 2000, the Company sold 62 Checkers restaurants in the
Mobile, Alabama, West Palm Beach and Orlando, Florida, market areas to Titan
Holdings, LLC for $10.25 million, less selling costs. Titan Holdings, LLC will
operate the newly acquired Checkers restaurants as a franchisee and pay ongoing
royalties based on sales at the restaurants. Also, Titan Holdings has entered
into a development agreement in conjunction with the purchase pursuant to which
it has committed to adding 29 new Checkers locations over the next five years.


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

INTRODUCTION

           On August 9, 1999, Checkers Drive-In Restaurants, Inc. ("Checkers")
and Rally's Hamburgers, Inc., ("Rally's") completed their merger ("Merger"). The
merger of Checkers with Rally's was accounted for as a reverse acquisition as
former shareholders of Rally's owned a majority of the outstanding stock of
Checkers subsequent to the merger. Therefore, for accounting purposes, Rally's
is deemed to have acquired Checkers. All pre-Merger financial information
presented represents the financial results for Rally's. The post-merger
financial results include both Rally's and Checkers.

           The Company receives revenues from restaurant sales, franchise fees
and royalties. The Company's revenue also includes payments resulting from an
operating agreement with CKE, referred to as Owner fee income in the
accompanying consolidated financial statements. Restaurant food and paper cost,
labor costs, occupancy expense, other operating expenses, depreciation and
amortization, and advertising and promotion expenses relate directly to
Company-owned restaurants. Other expenses, such as depreciation and
amortization, and general and administrative expenses, relate to Company
operated restaurant operations and the Company's franchise sales and support
functions. Owner expenses relate to CKE-operated restaurants and consist
primarily of depreciation and amortization. The Company's revenues and expenses
are affected by the number and timing of additional restaurant openings and the
sales volumes of both existing and new restaurants.


                                       9
<PAGE>

                             RESULTS OF OPERATIONS
           The table below sets forth the percentage relationship to total
revenues, unless otherwise indicated, of certain items included in the Company's
condensed consolidated statements of income and operating data for the periods
indicated:

<TABLE>
<CAPTION>
                                                                                          Quarter Ended
                                                                                            (Unaudited)
                                                                                     -----------------------------
                                                                                      March 27,       March 22,
                                                                                         2000          1999 (4)
                                                                                     -------------  --------------
REVENUES:
<S>                                                                                   <C>              <C>
Restaurant sales                                                                            94.9%            96.4%
Franchise revenues and fees                                                                  4.8%             3.0%
Owner fee and other income                                                                   0.3%             0.5%
                                                                                     -------------  --------------
   Total Revenues                                                                          100.0%           100.0%

COSTS AND EXPENSES:
Restaurant food and paper costs (1)                                                         31.3%            29.5%
Restaurant labor costs (1)                                                                  33.1%            32.4%
Restaurant occupancy expenses (1)                                                            7.7%             6.1%
Restaurant depreciation and amortization (1)                                                 2.0%             5.6%
Other restaurant operating expenses (1)                                                      9.8%             9.7%
General and administrative expenses                                                          8.3%             9.7%
Advertising (1)                                                                              7.5%             6.2%
Bad debt expense (1)                                                                         0.4%             0.6%
Owner depreciation (2)                                                                     160.2%           216.1%
Other depreciation and amortization                                                          1.8%             1.9%
                                                                                     -------------  --------------
  Total costs & expenses                                                                    97.8%            99.7%
                                                                                     -------------  --------------
  Operating income                                                                           2.2%             0.3%

OTHER INCOME (EXPENSE):
Interest Income                                                                              0.5%             0.6%
Loss on investment in affiliate                                                              0.0%            (1.4%)
Interest expense (including loan cost and bond discount amortization)                       (3.7%)           (5.6%)
                                                                                     -------------  --------------
Loss before minority interests, income tax expense, and extraordinary item                  (0.9%)           (6.0%)
Minority interests in operations of joint ventures                                           0.0%             0.0%
                                                                                     -------------  --------------
Loss before income tax expense and extraordinary item                                       (0.9%)           (6.0%)
Income tax expense                                                                           0.1%             0.1%
                                                                                     -------------  --------------
Net loss from continuing operations before extraordinary item                               (1.0%)           (6.2%)
Gain on early extinguishment of debt, net of income taxes                                    0.2%             0.9%
                                                                                     -------------  --------------
Net loss                                                                                    (0.8%)           (5.3%)
                                                                                     =============  ==============
Number of Company-operated restaurants (3):
       Restaurants open at the beginning of period                                            367              226
       Opened, closed or transferred, net during the period                                     -               (1)
                                                                                     -------------  --------------
       Total company-owned restaurants, end of period                                         367              225
                                                                                     =============  ==============
Number of franchised restaurants (3):
       Restaurants open at the beginning of period                                            540              249
       Opened, closed or transferred, net during the period                                    (3)              (5)
                                                                                     -------------  --------------
       Total franchised restaurant, end of period                                             537              244
                                                                                     -------------  --------------

       Total all restaurants opened at end of period (3):                                     904              469
                                                                                     =============  ==============
</TABLE>
(1) As a percentage of restaurant sales
(2) As a percentage of owner fee income
(3) 1999 reflects Rally's only.
(4) Includes the results of operations for Rally's only.

                                     10
<PAGE>

COMPARISON OF HISTORICAL RESULTS - QUARTER ENDED MARCH 27, 2000
AND QUARTER ENDED MARCH 22, 1999

           REVENUES. Total revenues increased 73% to $52.2 million for the
quarter ended March 27, 2000, compared to $30.1 million for the quarter ended
March 22, 1999. Company operated restaurant sales increased 70% to $49.5 million
for the quarter ended March 27, 2000, from $29.0 million for the quarter ended
March 22, 1999. The Merger with Checkers resulted in a $27 million increase in
sales. Excluding the impact of the Merger, sales decreased $6.5 million from the
prior year as a result of sold markets and store closings. Sales at comparable
Rally's restaurants for the quarter ended March 27, 2000, decreased 0.7%
compared to a 6.1% decrease for the quarter ended March 22, 1999. Sales at
comparable Checkers restaurants increased 1.1% for the quarter ended March 27,
2000, compared to a 14.3% decrease the prior year. Comparable Company-owned
restaurants are those continuously open during both reporting periods.

           Franchise revenues and fees increased 173% to $2.5 million for the
quarter ended March 27, 2000, from $0.9 million for the quarter ended March 22,
1999. This was primarily a result of the Merger and markets which were sold in
the last fiscal quarter of 1999 to new or existing franchisees. The Company
recognizes franchise fees as revenues when the Company has substantially
completed its obligations under the franchise agreement, usually at the opening
of the franchised restaurant.

           COSTS AND EXPENSES. Restaurant food and paper costs totalled
$15.5 million or 31.3% of restaurant sales for the quarter ended March 27, 2000,
compared to $8.6 million or 29.5% of restaurant sales for the quarter ended
March 22, 1999. The increase in these costs as a percentage of restaurant sales
was due to different promotions running this year compared to last year with
higher food costs.

           Restaurant labor costs, which includes restaurant employees'
salaries, wages, benefits and related taxes, totalled $16.4 million or 33.1% of
restaurant sales for the quarter ended March 27, 2000, compared to $9.4 million
or 32.4% of restaurant sales for the quarter ended March 22, 1999. The increase
in restaurant labor costs as a percentage of restaurant sales was due to the
impact of operating at lower sales productivity levels.

           Restaurant occupancy expense, which includes rent, property taxes,
licenses and insurance, totalled $3.8 million or 7.7% of restaurant sales for
the quarter ended March 27, 2000 compared to $1.8 million or 6.1% of restaurant
sales for the quarter ended March 22, 1999. This increase in restaurant
occupancy costs as a percentage of restaurant sales was due primarily to the
Merger. Additionally, Checkers' occupancy costs are higher than Rally's.

           Restaurant depreciation and amortization decreased by $666,000 or
41.0% for the quarter ended March 27, 2000, as compared to the quarter ended
March 22, 1999, primarily due to assets sold or to be sold as a result of the
market sales of company-operated restaurants.

           Advertising expense increased to $3.7 million or 7.5% of restaurant
sales for the quarter ended March 27, 2000, from $1.8 million or 6.2% of
restaurant sales for the quarter ended March 22, 1999. This was a result of the
change in the timing of media spending this year compared to the prior year plus
the combined spending for both chains in the current year.

           Other restaurant expenses includes all other restaurant level
operating expenses other than food and paper costs, labor and benefits, rent and
other occupancy costs which includes utilities, maintenance and other costs.
These expenses as a percentage of sales remained consistent with prior year and
totaled $4.8 million or 9.8% of restaurant sales for the quarter ended March 27,
2000, compared to $2.8 million or 9.7% of restaurant sales for the quarter ended
March 22, 1999.

           General and administrative expenses were $4.3 million or 8.3% of
total revenues, for the quarter ended March 27, 2000, compared to $2.9 million
or 9.7% of total revenues for the quarter ended March 22, 1999. The decrease in
these expenses as a percentage of total revenue is primarily a result of
overhead reductions related to the Merger and expense reductions implemented by
the new management team

           Owner expenses of $247,000 for the quarter ended March 27, 2000,
represent the Company's segregated ownership cost related to the 22 units
operated by CKE. These expenses consist primarily of depreciation and
amortization associated with the properties and have decreased by $105,000 from
the quarter ended March 22, 1999, due to a reduction in the number of units as
well as an impairment adjustment to the value of the assets taken in the
Company's last fiscal year.

           Other depreciation and amortization increased by $392,000 to $962,000
or 1.8% of total revenues from $570,000 or 1.9% of total revenues primarily as a
result of the Merger.

           Bad debt expense decreased to 0.4% of restaurant sales from 0.6% in
the prior year as a result of improved collectibility of franchisee receivables.

                                       11
<PAGE>

           INTEREST EXPENSE. Interest expense including loan cost amortization
increased to $1.9 million or 3.7% of total revenues for the quarter ended March
27, 2000 from $1.6 million or 5.6% of total revenues for the quarter ended March
22, 1999. This increase primarily was due to debt assumed with the Merger.

           INCOME TAX EXPENSE. The Company's income tax expense of $37,000 for
both periods represents estimated state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

           At March 27, 2000, the Company had a working capital deficit of $30.3
million. This significant deficit is due to the short term maturity of the
amounts due pursuant to both the Restated Credit Agreement and the 9 7/8% Senior
Notes. As of March 27, 2000, the Restated Credit Agreement had an outstanding
balance of $6.0 million maturing on April 30, 2000, and the 9 7/8% Senior notes
had an outstanding balance of $41.8 million maturing on June 15, 2000. As of May
11, 2000, the Restated Credit Agreement has been paid in full and the Senior
notes have been reduced to $40.0 million.

           The Company is aggressively pursuing a debt reduction strategy and
believes the majority of the debt reduction can be accomplished by the sale
of Company owned restaurants to new or existing franchisees in transactions
that provide immediate funds to reduce debt and also provide a continued
source of income through future royalties. As of May 3, 2000, the Company has
completed four separate transactions involving the sale of 135 restaurants to
new and existing franchisees and a sale leaseback transaction which have
generated cash proceeds to the Company of approximately $34.2 million less
selling costs and other expenses. The most recent of these transactions, the
sale of 62 Checkers restaurants, was completed on March 30, 2000. In
addition, the Company is continuing to pursue the sale of company operated
restaurants and currently has entered into either contracts or non-binding
letters of intent to sell 142 additional restaurants in five separate
transactions. The Company has also entered into a contract to sell its'
modular building manufacturing facility. Together, these remaining
transactions are expected to generate net proceeds to the Company of
approximately $33.5 million. The Company expects to close many, but possibly
not all of these transactions prior to the June 15, 2000 maturity of the 9
7/8% Senior notes. The Company is currently working with financial
institutions to secure bridge financing or other types of financing that
would enable it to meet its upcoming debt obligations. Although the Company
believes that it's debt reduction and refinancing strategy will be
successful, there can be no assurance that the Company will be able to
satisfy the entire principal balance of the Senior Notes due June 15, 2000.

           Cash and cash equivalents decreased approximately $3.0 million to
$1.4 million from the fiscal year ended January 3, 2000. Cash flow from
operating activities was $925,000, compared to $4.4 million during the same
period last year. The decrease of $3.4 million is largely attributable to
increases in the balances of accounts payable and accrued liabilities due to the
timing of payments in the current year.

           Cash flow from investing activities increased to $548,000 due
primarily to proceeds from the sales of fixed assets and decreases in
investments of $939,000 offset by $391,000 used for capital expenditures. The
capital expenditures primarily related to remodeling restaurants and the
purchase and installation of replacement equipment.

           Cash used for financing activities was $4.5 million. The Company paid
$4.0 million towards the senior notes and paid $1.2 million towards the Restated
Credit Agreement. The Company also received $734,000 by reducing is restricted
cash requirements.

ITEM 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate and foreign exchange rate fluctuations

           The Company's exposure to financial market risks is the impact that
interest rate changes and availability could have on its debt. Borrowings under
the Senior Notes bear interest at 9 7/8%. An increase in short-term and
long-term interest rates would result in a reduction of pre-tax earnings.
Substantially all of our business is transacted in U.S. dollars. Accordingly,
foreign exchange rate fluctuations have never had a significant impact on the
Company and are not expected to in the foreseeable future.

Commodity Price Risk

           The Company purchases certain products which are affected by
commodity prices and are, therefore, subject to price volatility caused by
weather, market conditions and other factors which are not considered
predictable or within the Company's control. Although many of the products
purchased are subject to changes in commodity prices, certain purchasing
contracts or pricing arrangements contain risk management techniques designed
to minimize price volatility. Typically, the Company uses these types of
purchasing techniques to control costs as an alternative to directly managing
financial instruments to hedge commodity prices. In many cases, the Company
believes it will be able to address commodity

                                       12
<PAGE>

cost increases, which are significant and appear to be long-term in nature by
adjusting its menu pricing or changing our product delivery strategy. However,
increases in commodity prices could result in lower restaurant-level operating
margins.

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          JONATHAN MITTMAN ET AL. V. RALLY'S HAMBURGERS, INC., ET AL.
(Case NO. C-94-0039-L-CS). In January and February 1994, two putative class
action lawsuits were filed, purportedly on behalf of the stockholders of
Rally's, in the United States District Court for the Western District of
Kentucky, Louisville division, against Rally's, Burt Sugarman and GIANT GROUP,
LTD. ("GIANT") and certain of Rally's former officers and directors and its
auditors. The cases were subsequently consolidated under the case name Jonathan
Mittman et al vs. Rally's Hamburgers, Inc., et al, case number C-94-0039-L (CS).
The complaints allege defendants violated the Securities Exchange Act of 1934,
among other claims, by issuing inaccurate public statements about Rally's in
order to arbitrarily inflate the price of its common stock. The plaintiffs seek
unspecified damages. On April 15, 1994, Rally's filed a motion to dismiss and a
motion to strike. On April 5, 1995, the Court struck certain provisions of the
complaint but otherwise denied Rally's motion to dismiss. In addition, the Court
denied plaintiffs' motion for class certification; the plaintiffs renewed this
motion, and despite opposition by the defendants, the Court granted such motion
for class certification on April 16, 1996, certifying a class from July 20, 1992
to September 29, 1993. In October 1995, the plaintiffs filed a motion to
disqualify Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
("Christensen, Miller") as counsel for defendants based on a purported conflict
of interest allegedly arising from the representation of multiple defendants as
well as Ms. Glaser's position as both a former director of Rally's and a partner
in Christensen, Miller. Defendants filed an opposition to the motion, and the
motion to disqualify Christensen, Miller was denied. A settlement conference
occurred on December 7, 1998, but was unsuccessful. Fact discovery was completed
in August 1999. Expert discovery is scheduled to be completed by June 2000.
Motions for Summary Judgment will be filed by the parties by early July, 2000.
Management is unable to predict the outcome of this matter at the present time
or whether or not certain available insurance coverage's will apply. The
defendants deny all wrongdoing and intend to defend themselves vigorously in
this matter.

           FIRST ALBANY CORP., AS CUSTODIAN FOR THE BENEFIT OF NATHAN
SUCKMAN V. CHECKERS DRIVE-IN RESTAURANTS, INC. ET AL. Case No. 16667. This
putative class action was filed on September 29, 1998, in the Delaware Chancery
Court in and for New Castle County, Delaware by First Albany Corp., as custodian
for the benefit of Nathan Suckman, an alleged stockholder of 500 shares of the
Company's common stock. The complaint names the Company and certain of its
current and former officers and directors as defendants including William P.
Foley, II, James J. Gillespie, Harvey Fattig, Joseph N. Stein, Richard A.
Peabody, James T. Holder, Terry N. Christensen, Frederick E. Fisher, Clarence V.
McKee, Burt Sugarman, C. Thomas Thompson and Peter C. O'Hara. The Complaint also
names Rally's and GIANT as defendants. The complaint arises out of the proposed
merger announced on September 28, 1998 between the Company, Rally's and GIANT
(the "Proposed Merger") and alleges generally, that certain of the defendants
engaged in an unlawful scheme and plan to permit Rally's to acquire the public
shares of the Company's stock in a "going-private" transaction for grossly
inadequate consideration and in breach of the defendants' fiduciary duties. The
plaintiff allegedly initiated the Complaint on behalf of all stockholders of the
Company as of September 28, 1998, and seeks inter alia, certain declaratory and
injunctive relief against the consummation of the Proposed merger, or in the
event the Proposed Merger is consummated, recision of the Proposed Merger and
costs and disbursements incurred in connection with bringing the action,
including attorney's fees, and such other relief as the Court may deem just and
proper. In view of a decision by the Company, GIANT and Rally's not to implement
the transaction that had been announced on September 28, 1998, plaintiffs have
agreed to provide the Company and all other defendants with an open extension of
time to respond to the complaint. Although, plaintiffs indicated that they would
likely file an amended complaint in the event of the consummation of a merger
between the Company and Rally's, no such amendment has been filed to date. The
Company believes the lawsuit is without merit and intends to defend it
vigorously should plaintiffs seek to renew the lawsuit.

           DAVID J. STEINBERG AND CHAILE B. STEINBERG, INDIVIDUALLY AND
ON BEHALF OF THOSE SIMILARLY SITUATED V. CHECKERS DRIVE-IN RESTAURANTS, INC., ET
AL. Case No. 16680. This putative class action was filed on October 2, 1998, in
the Delaware Chancery Court in and for New Castle County, Delaware by David J.
Steinberg and Chaile B. Steinberg, alleged stockholders of an unspecified number
of shares of the Company's common stock. The complaint names the Company and
certain of its current officers and directors as defendants including William P.
Foley, II, James J. Gillespie, Harvey Fattig, Joseph N. Stein, Richard A.
Peabody, James T. Holder, Terry N. Christensen, Frederick E. Fisher, Clarence V.
McKee Burt Sugarman, C. Thomas Thompson and Peter C. O'Hara. The Complaint also
names Rally's and GIANT as defendants. As with the FIRST ALBANY complaint
described above, this complaint arises out of the proposed merger announced on
September 28, 1998 between the Company, Rally's and GIANT (the "Proposed
Merger") and alleges generally, that certain of the defendants engaged in an
unlawful scheme and plan to permit Rally's to acquire the public shares of the
Company's common stock in a "going-private" transaction for grossly inadequate
consideration and in breach of the defendant's fiduciary duties. The plaintiffs
allegedly initiated the Complaint on behalf of all stockholders of the Company
as of September 28, 1998, and seeks INTER ALIA, certain declaratory and
injunctive relief against the consummation of the Proposed merger, or in the
event the Proposed Merger is consummated, recision of the Proposed Merger and
costs and disbursements incurred in connection with bringing the action,

                                       13
<PAGE>

including attorneys' fees, and such other relief as the Court may deem just and
proper. For the reasons stated above in the description of the FIRST ALBANY
action, plaintiffs have agreed to provide the Company and all other defendants
with an open extension of time to respond to the complaint. Although, plaintiffs
indicated that they would likely file an amended complaint in the event of the
consummation of a merger between the Company and Rally's, no such amendment has
been filed to date. The Company believes the lawsuit is without merit and
intends to defend it vigorously.

           GREENFELDER ET AL. V. WHITE, JR., ET AL. On August 10, 1995, a state
court complaint was filed in the Circuit Court of the Sixth Judicial Circuit in
and for Pinellas County, Florida, Civil Division, entitled GAIL P. GREENFELDER
AND POWERS BURGERS, INC. V. JAMES F. WHITE, JR., CHECKERS DRIVE-IN RESTAURANTS,
INC., HERBERT G. BROWN, JAMES E. MATTEI, JARED D. BROWN, ROBERT G. BROWN AND
GEORGE W. COOK, Case No. 95-4644-CI-21. A companion complaint was also filed in
the same Court on May 21, 1997, entitled GAIL P. GREENFELDER, POWERS BURGERS OF
AVON PARK, INC., AND POWER BURGERS OF SEBRING, INC. V. JAMES F. WHITE, JR.,
CHECKERS DRIVE-IN RESTAURANTS, INC., HERBERT G. BROWN, JAMES E. MATTEI, JARED D.
BROWN, ROBERT G. BROWN AND GEORGE W. COOK, Case No. 97-3565-CI-21. The original
complaint alleged, generally, that certain officers of the Company intentionally
inflicted severe emotional distress upon Ms. Greenfelder, who is the sole
stockholder, president and director of Powers Burgers, Inc., a Checkers
franchisee. The present versions of the Amended Complaints in the two actions
assert a number of claims for relief, including claims for breach of contract,
fraudulent inducement to contract, post-contract fraud and breaches of implied
duties of "good faith and fair dealings" in connection with various franchise
agreements and an area development agreement, battery, defamation, negligent
retention of employees, and violation of Florida's Franchise Act. The Company
believes that these lawsuits are without merit, and intends to continue to
defend them vigorously.

           CHECKERS DRIVE-IN RESTAURANTS, INC. V. TAMPA CHECKMATE FOOD
SERVICES, INC., ET AL. On August 10, 1995, a state court Counterclaim and
Third Party Complaint was filed in the Circuit Court of the Thirteenth
Judicial Circuit in and for Hillsborough County, Florida, Civil Division,
entitled TAMPA CHECKMATE FOOD SERVICES, INC., CHECKMATE FOOD SERVICES, INC.
AND ROBERT H. GAGNE V. CHECKERS DRIVE-IN RESTAURANTS, INC., HERBERT G. BROWN,
JAMES E. MATTEI, JAMES F. WHITE, JR., JARED D. BROWN, ROBERT G. BROWN AND
GEORGE W. COOK, Case No. 95-3869. In the original action filed by the Company
in July 1995, against Mr. Gagne and Tampa Checkmate Food Services, Inc.,
(hereinafter "Tampa Checkmate") a Company controlled by Mr. Gagne, the
Company sought to collect on a promissory note and foreclose on a mortgage
securing the promissory note issued by Tampa Checkmate and Mr. Gagne and
obtain declaratory relief regarding the rights of the respective parties
under Tampa Checkmate's franchise agreement with the Company. The
Counterclaim, as amended, alleged violations of Florida's Franchise Act,
Florida's Deceptive and Unfair Trade Practices Act, and breaches of implied
duties of "good faith and fair dealings" in connection with a settlement
agreement and franchise agreement between various of the parties and sought a
judgment for damages in an unspecified amount, punitive damages, attorneys'
fees and such other relief as the court may deem appropriate.

           The case was tried before a jury in August of 1999. The court
entered a directed verdict and an involuntary dismissal as to all claims
alleged against Robert G. Brown, George W. Cook, and Jared Brown. The court
also entered a directed verdict and an involuntary dismissal as to certain
other claims alleged against the Company and the remaining individual
Counterclaim Defendants, James E. Mattei, Herbert G. Brown and James F.
White, Jr. The jury returned a verdict in favor of the Company, James E.
Mattei, Herbert G. Brown and James F. White, Jr. as to all counterclaims
brought by Checkmate Food Services, Inc. and in favor of Mr. Mattei as to all
claims alleged by Tampa Checkmate and Mr. Gagne. In response to certain jury
interrogatories, however, the jury made the following determination: (i) That
Mr. Gagne was fraudulently induced to execute a certain Unconditional
Guaranty and that the Company was therefore not entitled to enforce its
terms; (ii) That the Company, H. Brown and Mr. White fraudulently induced
Tampa Checkmate to execute a certain franchise agreement whereby Tampa
Checkmate was damaged in the amount of $151,331; (iii) That the Company, H.
Brown and Mr. White violated a provision of the Florida Franchise Act
relating to that franchise agreement whereby Tampa Checkmate and Mr. Gagne
were each damaged in the amount of $151,330; and (iv) That none of the
Defendants violated Florida's Deceptive and Unfair Trade Practices Act
relating to that franchise agreement.

           As a result of certain pre-trial orders entered by the court, the
Company believes that the responses to the jury interrogatories are "advisory"
and are not binding on the court. The court has determined, however, that the
responses to the jury interrogatories are binding upon it and on April 17, 2000,
entered a judgment accordingly. The Company believes that entry of the judgment
is erroneous and has posted a supersedeas bond and an appeal of judgment.

           TEX-CHEX, INC. ET AL V. CHECKERS DRIVE-IN RESTAURANTS, INC. ET. AL.
On February 4, 1997, a Petition was filed against the Company and two former
officers and directors of the Company in the District Court of Travis County,
Texas 98th Judicial District, ENTITLED TEX-CHEX, INC., BRIAN MOONEY, AND SILVIO
PICCINI V. CHECKERS DRIVE-IN RESTAURANTS, INC., JAMES MATTEI, AND HERBERT G.
BROWN and numbered as Case No. 97-01335 on the docket of said court. The
original Petition generally alleged that Tex-Chex, Inc. and the individual
Plaintiffs were induced into entering into two franchise agreements and related
personal guarantees with the Company based on fraudulent misrepresentations and
omissions made by the Company. On October 2, 1998, the Plaintiffs filed an
Amended Petition realleging the fraudulent misrepresentations and omission
claims set forth in the original Petition and asserting additional causes of
action for violation of Texas' Deceptive Trade Practices Act and violation of
Texas' Business Opportunity Act. The Company believes the causes of action
asserted in the amended Petition against the Company and the individual
defendants are without merit and intends to defend them vigorously.

                                       14
<PAGE>

           CHECKERS DRIVE-IN RESTAURANTS, INC. V. INTERSTATE DOUBLE DRIVE-THRU,
INC. ET. AL. On May 9, 1998, a Counterclaim was filed against the Company and a
former officer and director of the Company, Herbert T. Brown, in the United
States District Court for the Middle District of Florida, Tampa Division,
entitled CHECKERS DRIVE-IN RESTAURANTS, INC. V. INTERSTATE DOUBLE DRIVE-THRU,
INC. AND JIMMIE V. GILES and numbered as Case No. 98-648-CIV-T-23B on the docket
of said court. The original Complaint filed by the Company seeks a temporary and
permanent injunction enjoining Interstate Double Drive-Thru, Inc. and Mr. Giles'
continued use of Checkers' Marks and trade dress notwithstanding the termination
of its Franchise Agreement and to collect unpaid royalty fees and advertising
fund contributions. The Court granted the Company's motion for a preliminary
injunction on July 16, 1998. The Counterclaim generally alleges that Interstate
Double Drive-Thru, Inc. and Mr. Giles were induced into entering a franchise
agreement and a personal guaranty, respectfully, with the Company based on
misrepresentations and omissions made by the Company. The Counterclaim asserts
claims for breach of contract, breach of the implied convenant of good faith and
fair dealing, violation of Florida's Deceptive Trade Practices Act, violation of
Florida's Franchise Act, violation of Mississippi's Franchise Act, fraudulent
concealment, fraudulent inducement, negligent misrepresentation and rescission.
The Company has filed a motion for summary judgement which remains pending. The
Company believes the causes of action asserted in the Counterclaim against the
Company and Mr. Brown are without merit and intends to defend them vigorously.

           DOROTHY HAWKINS V. CHECKERS DRIVE-IN RESTAURANTS, INC. AND KPMG PEAT
MARWICK, Case No. 99-001584-CI-21. On March 4, 1999, a state court complaint was
filed in the Circuit Court in and for Pinellas County, Florida, Civil Division.
The Complaint alleges that Mrs. Hawkins was induced into purchasing a restaurant
site and entering into a franchise agreement with the Company based on
misrepresentations and omissions made by Checkers. The Complaint asserts claims
for breach of contract, breach of the implied convenant of good faith and fair
dealing, violation of Florida's Deceptive Trade Practices Act, fraudulent
concealment, fraudulent inducement, and negligent representation. The Company
denies the material allegations of the Complaint and intends to defend the
lawsuit vigorously.

           SNAPPS RESTAURANTS, INC. V. CHECKERS DRIVE-IN RESTAURANTS, INC. On
February 21, 2000, a Complaint was filed against the Company in the Common Pleas
Court for Franklin County, Ohio entitled SNAPPS RESTAURANTS, INC. V. CHECKERS
DRIVE-IN RESTAURANTS, INC. which was thereafter removed by the Company to the
United States District Court for the Southern District of Ohio, and numbered as
Case No. C2-00-0216 on the docket of said court (the "Southern District
Action"). The Complaint filed in the Southern District Action seeks a temporary
and permanent injunction enjoining the Company from terminating seventy-seven
franchise agreements with Snapps Restaurants, Inc. ("Snapps") and alleges
wrongful termination of franchise agreements and various breaches of contract.
On February 22, 2000, a Complaint was filed by the Company against Snapps in the
United States District Court for the Northern District of Ohio entitled CHECKERS
DRIVE-IN RESTAURANTS, INC. V. SNAPPS RESTAURANTS, INC., and numbered as Case No.
3:00CV7110 on the docket of said court (the "Northern District Action"). The
Company's Complaint in the Northern District Action seeks to enjoin Snapps'
continued use of the Rally's marks and trade dress following the termination of
its franchise agreements and to collect unpaid royalty fees and advertising fund
contributions. The Company and Snapps have also filed arbitration proceedings
with the American Arbitration Association which have been assigned Case No. 25 Y
114 00057 00 and Case No. 331140004900 (collectively the "Arbitration
Proceedings"). On March 17, 2000, the parties reached an agreement to resolve
the dispute. Pursuant to the terms of the settlement agreement, Snapps executed
a promissory note in an amount equal to all unpaid royalty fees and advertising
fund contributions. Snapps and the Company executed a new multiple restaurant
franchise agreement and the parties dismissed all pending litigation and
arbitration proceedings.

           The Company is involved in various other claims and legal actions
arising in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.


ITEM 2.    CHANGES IN SECURITIES

           None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

           None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           None.

ITEM 5.    OTHER INFORMATION

           None

                                       15
<PAGE>


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits:

           27  Financial Data Schedule

(b)        Reports on 8-K:


           The following reports on Form 8-K were filed during the quarter
           covered by this report:

           None




                                       16



<PAGE>

SIGNATURE

           Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                               CHECKERS DRIVE-IN RESTAURANTS, INC.
                               -----------------------------------
                                         (Registrant)


Date:  May 11, 2000            By: /s/  Theodore Abajian
                                  -------------------------
                               Senior Vice President and Chief Financial Officer
                               (Principal Financial and Accounting Officer)






                                       17
<PAGE>


                            MARCH 27, 2000 FORM 10-Q
                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                  EXHIBIT INDEX







EXHIBIT  #             EXHIBIT DESCRIPTION
----------            ---------------------

  27         Financial Data Schedule (included in electronic filing only).











                                       18